Updated: New iOS 5 Beta Adds To iCloud Streaming Confusion

It looked like one of the mysteries of Apple’s new iTunes Match service has been solved as developer preview versions of the software make an appearance within weeks of its expected launch. Users will be able to stream their music to any Mac, PC, or iOS device they own when the new service arrives alongside the launch of Apple’s iCloud — but, despite initial reports, it’s not streaming as we know it.

When Apple (NSDQ: AAPL) first showed off iTunes Match–which scans your hard drive’s music library and creates copies of your songs on Apple’s servers for access from any iOS device–it wasn’t clear if users would have the ability to stream that music from Apple’s servers to their devices, or whether they’d have to download that music. Having access to one’s music library from any device is an attractive notion, but if downloading those songs was the only option, mobile devices like the iPhone or iPad with limited storage would fill up quickly.

But Insanely Great Mac has posted a walkthrough video that demonstrates how iPhone owners will be able to both stream and download songs that are stored on Apple’s servers. You’ll have to pay $24.99 a year for the iTunes Match service, but it’s now quite a bit more useful than it would have been had downloading been the only option.

There’s a twist though: it’s not the kind of streaming a la Spotify or Rhapsody that lets you listen without downloading. Instead, Apple told AllThingsD, it’s simultaneous listen and download. You can listen while you download, much the way you can start viewing some videos before they’ve fully loaded. Of course, you can delete later but it’s not the same as real life in the cloud.

It’s not clear why Apple had to hold off on the demonstration of this feature, since the requisite deals with the recording industry appeared to have been completed in the weeks before Apple’s June developer conference where iTunes Match was first showcased. Still, it’s a nice addition to the ongoing shift from iTunes as an application that works only on a computer or mobile device to iTunes as a Web-based service.